A millennial who manages $450 million for the ultrarich explains why her generation feels uncomfortable in the financial system - and outlines how they can invest with confidence
- Wealth manager Sara Rajo-Miller, 28, oversees $450 million and was just named one of the best US wealth managers under 40.
- Rajo-Miller says many of her peers don't feel at home in the financial system - and it's a serious problem that impairs their ability to gain wealth and prepare for the future.
- She has tips for people who aren't sure where to start, and urges her peers to treat financial education as a long-term process, not a question with a few quick answers.
- She says the financial crisis has made her generation overly cautious about investing, and many millennials have less access to retirement and financial planning tools because they're working in nontraditional jobs.
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While millennials have faced a slew of challenges in building up wealth and getting ahead financially, the most consequential problem facing the generation might not be measured in dollars.
It's well-known that Americans under 40 are saddled with more debt than their parents and grandparents, but according to one of the best millennial-age wealth managers in the US, the bigger scale problem is that they feel left out of the systems that can help them get ahead financially and gain wealth over time.
And the longer that lasts, the further they can fall behind.
"A lot of millennials saw what happened in 2008, whether they were in the working world at that time or just entering the workforce, and I think are a little distrusting of big institutions, banks, financial advisors, maybe as a whole," says Sara Rajo-Miller, who manages about $450 million in wealth for Miracle Mile Advisors, a $1.8 billion firm in Los Angeles.
Rajo-Miller is 28, and Forbes recently named her one of the top next-generation wealth managers, a group of the most successful millennials in the field.
In an exclusive interview with Business Insider, she said many of her peers don't want to risk their money a decade after seeing some of their first wealth wiped by the stock market meltdown caused by the global financial crisis.
According to the real estate investing startup Concreit, 42% of millennials say they don't have a dedicated savings or investment account for retirement, and 46% aren't investing at all. Both figures have declined sharply compared to young people before the 2007-08 financial crisis.
On top of that lingering concern, Rajo-Miller says that the expansion of freelance and gig work mean that fewer millennials are getting comfortable with basic tools like 401(k) retirement accounts that would help them save for the future and plan for retirement.
"If you are working in a place that doesn't have a 401(k), or it doesn't have any sort of education around saving for retirement, you have to go out of your way to learn," she said. "It seems overwhelming."
Rajo-Miller's clients are in good shape in wealth terms, as they all have at least $1 million in assets. But she says that group defies some of the stereotypes of millennials as hands-off or uninterested in details, implying that if more people her age were exposed to financial tools and ideas, they would embrace them.
"My experience working with millennials is that they love digging into the financial planning process and they want to talk to an advisor or a financial planner," she said. "They have so many questions."
If they're not getting that kind of help from their employer, she urges them to do it themselves, and to treat that education as a long-term process that requires maintenance - a kind of financial keeping in shape.
Here are her tips for people who want to save for the future but don't know where to start:
Open an account at one a major brokerage and learn the basics, including how much you're allowed to contribute to a retirement account. If your income is low enough, she says you should create a Roth IRA, which offers tax advantages.
While a conversation with a financial adviser is helpful, Rajo-Miller says robo advisers are also a great way to get started because they're easy to use and understand.
"The Betterments and Wealthfronts of the world are great and have been a very accessible tool, I think, for millennials to go on and start learning about investing," she said.
The critical point is that millennials are investing for the long term, with retirement potentially 30 or more years away, but that doesn't mean they can afford to waste time.
"You have to be consistent and put in the work," she said. "It doesn't just kind of happen overnight."